FRIDAY WILL DECIDE THE BOUNCE (OR MAYBE NOT) - Top MM Wall Street
source (who backs Romney) called yesterday during the convention
proceedings: "If the number is good Friday it doubles his bounce.
Maybe triples it. If it comes in really low, it could extinguish
it. I don't think there's ever been a more important jobs number,
politically, than this one." M.M. asked: "But what if it comes in
around expectations of 125,000 or so with no change to the 8.3%
jobless rate?" Answer: "Yeah, well then it won't matter as much."

SocGen's Brian Jones thinks the number will come in much worse
than the consensus:

Nonfarm payroll gains are forecast to continue along their
saw-toothed path in August, with net job creation slowing to just
70,000 after the 163,000 jump posted in July (see Chart 2.1).
Indeed, our analysis suggests that quirks
associated with this year’s calendar configuration – this is the
first time five weeks elapsed between the July and August
establishment surveys since 2008 – could be responsible for
knocking almost 45,000 jobs off the BLS’ preliminary print.

History also hints that the median Street projection of 115,000
could prove overly optimistic. Facing a similar calendar in 2007,
the consensus of economists at that time expected nonfarm
payrolls to expand by 100,000. he BLS, in contrast, estimated a
loss of 4,000 jobs. August 2001 was similar, with nonfarm
payrolls dropping by 113,000, more than double the 45,000 decline
anticipated by the Street.

The focus will shift swiftly to the US Labor Report. Underlying
payroll growth is around 100,000 a month, and slowing. Calendar
effects boosted last month to 163,000 and there will probably be
payback. Brian Jones forecasts a 70,000 increase. I don’t want to
shift the odds in the SG sweepstake, but I’m thinking of going
low!

If these numbers do come in bad: political disaster.

Remember there's a huge margin for error on the first pass of any
monthly jobs report, so if this really is going to be a huge
factor in the election, then we're talking about a huge nod given
to random chance.

There's a good chance that the November jobs report (which will
come just 4 days before the election) will surpass this one in
terms of political import.

That being said, this one is also quite economically significant,
as the Fed meets the next way.